SEOUL, June 20 (Korea Bizwire) – Deposit interest rates have fallen so low that consumers can’t even pay a single ATM fee with their annual interest income, and their distress is compounded by the latest policies from the big banks to increase wire transfer and ATM fees.
The annual nominal interest rate for a savings account at Citibank Korea was recently reduced from 0.1 percent to 0.01 (for less than 10 million won). As such, a customer would receive 1,000 won in annual interest on a 10-million-won deposit. But after taking away the 15.4 percent tax on interest income, they’re only left with 846 won. This is less than the ATM withdrawal fee of 900 won.
Currently, Citibank customers have to pay 900 won when withdrawing cash from non-Citibank ATMs after work hours.
But the circumstances are almost identical for customers at other banks.
KB Kookmin Bank customers also have to pay 900 won in ATM fees when trying to withdraw money from non-Kookmin ATMs after business hours. The fee is increasing to 1,000 starting on June 20.
Shinhan Bank customers are also subject to 900 won in ATM fees when making withdrawals from non-Shinhan machines.
Wire transfer fees are even more expensive.
To wire a sum exceeding 100,000 won from Kookmin Bank, up to 4,000 won in fees are charged to customers, an amount that would take almost five years to accumulate from interest on deposits.
In fact, KB Kookmin Bank has been increasing the fees on wire transfers, deposits, ATM withdrawals, and foreign exchange, starting June 1. Shinhan Bank also increased its fees on foreign currency wire transfers back in April, while KEB Hana Bank and Citibank raised certain fees for their customers earlier this year.
“It angers me to see fees increasing when so little is made from interest on deposits,” said a 35-year-old office worker. “Honestly, I don’t even want to have my money kept at a bank, but then I don’t have an alternative solution.”
“The various fees set by domestic banks seem a little excessive compared to current interest rates,” said Cho Nam-hee, president of the Financial Supervisory Service. “I believe the banks will continue to raise the fees, which is why it’s the point in time for us to re-examine these banks’ commissions system.”
By Kevin Lee (email@example.com)